Mesoblast poised to charge ahead among biotechs

Silviu Itescu has more than 20 per cent stake in Mesoblast, the company he founded and heads.
AFR

by
Khia Mercer

Mesoblast
founder and chief executive
Silviu Itescu
is preparing to lead the largest stem cell company in the world as the regenerative medicine company finalises the acquisition of its US-sister group, Angioblast Systems.

Professor Itescu, who is Mesoblast’s largest shareholder with more than 20 per cent, said his holding in Mesoblast will increase under the combined entity, which is tipped to have a market value of more than $750 million.

“This has been my baby and I’ve been dedicated to making this thing work since I founded the start-up company, Angioblast, in 2001 or 2002," Professor Itescu told The Australian Financial Review, following the company’s annual general meeting.

Professor Itescu moved from Romania to Australia in his early childhood, and later spent several years completing his medical residency and years of research in the United States before joining the commercial biotech world.

“I had quite a prominent research group in New York, and we were amongst the first groups to show that you could use adult stem cells for cardiac repair.

“It became clear to me that if you wanted to develop stem cell-based technologies, you had to move out of the research field and reliance on grants and move towards the commercial world," he said.

Following the merger with Angioblast, Professor Itescu said the company’s pipeline would be extended from orthopaedics, including spinal fusion and osteoarthritis, to include products for treating congestive heart failure, cardiac arrest, eye diseases, diabetes and bone marrow repair.

“Post-merger, we now have all the intellectual property within one umbrella, which allows us to have a width and breadth of potential products, and we can diversify based on the size of the market,"

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“Clearly in the past couple of years with the GFC there have been some really bad times. We’ve had the ability to be resilient and put our heads down. When things get tough you have to think laterally - you have to have multiple things going on simultaneously."

Given the relatively fast path to market for stem-cell therapies compared with other treatments, analysts believe it will be a relatively short time before Mesoblast’s technology begins to yield commercial revenue.

“We believe bone marrow transplantation is potentially the fastest revenue generator moving into the phase three trial phase. We expect to start this early in the new year with a focus to getting it to market within three years," he said.

“It’s not a massive market but it’s a niche market where there is a very large unmet need and the pricing point would be quite a premium."

Mesoblast shares touched a record high of $3.38 yesterday, and closed almost 5 per cent higher at $3.34. The stock has risen about 40 per cent over the past month, and 145 per cent so far this year. making it one of the best performers in the All Ordinaries Index.

If Mesoblast progresses through clinical trials, analysts expect it will most likely need a partner to market and distribute the treatment, and it could become a takeover target. Industry specialists think Mesoblast could strike a licensing deal with a big pharmaceutical or medical device company by early next year.

“We have had a lot of discussions with potential pharmaceutical partners and distribution partners who are mainly in the US, which represents between 60 per cent and 80 per cent of our target markets."

“We’re a company that has a platform technology with multiple product candidates, which always presents a pipeline of interest to a large pharmaceutical company," Professor Itescu said.

The company received approval from the Australian Therapeutic Goods Administration in July to commercially manufacture and distribute its adult stem-cell products to hospitals and clinicians in Australia, which can be used to treat bone fracture treatment.

Mesoblast posted a 16 per cent decline in revenue due to lower government grants in fiscal 2010. Its net loss increased 20 per cent due to higher spending on clinical trials.